Management Accounting Section Midyear Meeting

The Effects of Goals and Incentives on Effort Intensity

• In Event: Budgeting and Target Setting III

Abstract

Prior literature highlights mixed findings associated with the joint effects of goals and performance-based pay. In this study, we extend the literature to focus on a the mechanism by which these motivational tools affect employees' behavior; namely, effort intensity. Using cognitive pupillometry, we are able to directly and reliably measure effort intensity, allowing for a more direct comparison of the individual and joint effects of goals and performance-based pay. In addition, we explore the effects of the relationship between these two mechanisms on employees' effort intensity; specifically, whether they exist independently, as when the firm provides "mere" goals, versus when the effect of goals and performance-based pay interdependently affect employees' compensation.

Authors

• Gary W Hecht, University of Illinois-Urbana-Champaign

• Kristian Rotaru, Monash Business School

• Axel Klaus-Dieter Schulz, La Trobe University

• Kristy L Towry, Emory University

• Alan Webb, University of Waterloo